HIS HONOUR: Pursuant to a Notice of Motion filed on 9 February 2016, the first to fourth defendants claim privilege in a communication between their solicitors and a barrister who has produced documents in answer to a subpoena for production. The communication in question is an e-mail dated 20 November 2014, which the applicants' evidence asserts, without contradiction, is a communication for the purposes of obtaining evidence from a potential witness (the barrister) in connection with a pending or contemplated proceeding. Subject to the argument about waiver, the respondents to the motion, though they do not admit that the communication is a privileged one, do not dispute it. I am satisfied on the evidence that it is plainly, subject to any question of waiver, a privileged communication.
The only significant submission made by the respondents on the motion is that any privilege was waived by the failure to file a motion claiming privilege prior to or on 8 February 2016. The background to that submission is that the documents were produced to the Court on 1 February, when the Registrar made an order for first access to the present applicants, and general access thereafter "subject to any application". The applicants' solicitors wrote to the respondents' solicitors on 4 February a letter claiming privilege in respect of the e-mail. While it may not articulate the claim as thoroughly as the subsequent affidavit, it nonetheless refers to the applicable provisions of (NSW) Evidence Act 1995, and asserts the claim for privilege. When there was no response to that letter, the applicants on 5 February wrote to the Registrar claiming privilege, and, by 5 February, had been informed by the Registrar that although an interlocutory application would be required, "until that is done the Court would not allow access to the documents".
While I readily accept that failure to make a timely claim for privilege can in some circumstances amount to a wavier, no intention to waive the privilege can be inferred in this case in the circumstances which I have related. To the contrary, it is plain that at all times the privilege was being asserted. Although the barrister, when she produced the documents, did not herself claim privilege, the person entitled to privilege is, in such circumstances, entitled to take the objection to production, and if the documents have been produced by the third party recipient, to inspection. [1]
I therefore uphold the applicants' claim for privilege in respect of the email.
The Court orders that the e-mail sent 20 November 2014 at 11.10am, from the solicitor for the first to fourth defendants and first and second cross claimants Edward Shin of Alpha Lawyers, to Juliette Lucy, barrister ("the e-mail"), be placed in a packet marked "subject to client legal privilege", and not produced to any party for inspection in these proceedings.
In order to avoid multiple costs orders, I will not make a costs order until I have dealt with the other motion.
[3]
Application to set aside subpoena
By Notice of Motion filed on 28 January 2016, the defendants/applicants seek orders setting aside a subpoena to produce addressed to "Topfield Australia", and a Notice to Produce to Court addressed to the first defendant Toppro Pty Limited, contending that there is no legitimate forensic purpose for their issue.
In the substantive proceedings, by their Fourth Amended Statement of Claim, the plaintiffs allege that the second plaintiff Il Nam Yoo held 100% of the shares in Toppro; that in or about May 2012, he agreed with one Joon Won Choi to execute a transfer of those shares, partly in blank, in favour of the fourth defendant Wealth Wisdom Investments Limited for a consideration of 12,000 USD, and gave the executed and partly completed transfer to Choi upon terms that it was to lapse in three months, and that Choi was not to take any step in relation to it after the expiry of that three-month period, which period was subsequently extended to about November 2012; and that by early 2013, any authority Choi had to act upon the transfer had expired. It is then alleged that between May and June 2014, Choi - without authority - gave the transfer document to the second defendant Ok Ja Joo who fraudulently and without authority altered it by substituting herself as the transferee, and thereafter obtained registration of the transfer. In essence, the plaintiffs complain that the transfer to Ok Ja Joo was procured by fraud, or was a conversion of the shares, or was pursuant to a transfer document which was impermissibly and fraudulently altered and, on any of those grounds, was void. The plaintiffs claim return of the shares, and alternatively damages.
The proceedings are set down for hearing to commence on 30 March 2016. Directions, of a guillotine kind, were made on 19 October 2015. Although there is the notional possibility that an application might be made for leave under those directions, the affidavit evidence may be regarded as being complete.
The subpoenas in question are in practically identical terms, and seek production from each recipient of the following documents, presumably of the relevant recipient:
1. all bank statements for the periods of 1 January 2014 to date.
2. all Business Activity Statements for the periods from 1 January 2014 to date.
3. all Profit and Loss Statements for the periods from 1 January 2014 to date.
4. all balance sheets for the periods from 1 January 2014 to date.
5. all records of orders from Topfield Korea for the periods from 1 January 2014 to date.
6. all records of payment to OK Shop for the periods from 1 January 2014 to date
7. all wage records for the periods from 1 January 2014 to date.
8. all documents of communications between Topfield Korea and in particular with Yong Chul Lee between takeover to now for the periods from 1 January 2014 to date.
The plaintiffs did not press para 8. In respect of para 5, the plaintiffs said - which was in any event reasonably self-evident - that the reference to orders "from" Topfield Korea was intended to be read as orders "to" Topfield Korea (as Topfield Korea was a supplier to the Australian entities), and I proceed on that basis.
The plaintiffs submitted that although it might not at first sight be apparent on the face of the pleadings or affidavit evidence that documents in the categories sought in the subpoenas were relevant, it was "on the cards" that they would reveal that, sometime after 20 June 2014, the business of Toppro declined, while that of Topfield Australia grew, reflecting a transfer of business from Toppro to Topfield Australia. That that might be so is not merely speculation but is founded on evidence that, to the knowledge of the Court and the defendants, has been given in related proceedings. [2] The plaintiffs then say, principally, that if the documents in fact show that to be the case, that would provide some evidence - or at least a basis for cross-examination of the defendants' witnesses - to the effect that they were conscious of guilt in procuring the impugned transfer, as such a transfer of business would manifest an attempt, once having obtained control of the company, to transfer away its business and place it beyond the plaintiff's reach. Additionally, the plaintiffs argue that such a transfer of business would be relevant to the appropriateness of restitution of the subject shares as a remedy, and to the measure of damages.
It is difficult to see how such evidence could be useful on the question of damages without further expert evidence, the possibility of adducing which by 30 March seems remote. But, as to their principal argument, it is important to recognise that a subpoena (and a notice to produce of this kind, which is akin to a subpoena) is - unlike discovery - not confined to documents that relate to matters in issue in the proceedings, but may seek documents that go purely to credit. It is a fundamental distinction between processes of and akin to subpoenas for production, and those of discovery, that while the latter is limited to documents that relate to matters in issue in the proceedings, the former are not, to the extent that they may be used to obtain documents that relate only to the credit of a party or witness. [3] Moreover in this case, documents that would provide a basis for suggesting a motive, or consciousness of guilt, would in fact not be relevant only to credit, but would bear on a fact in issue in the proceedings, namely whether the impugned transfer was a fraudulent or otherwise improper transaction.
Although it has been suggested in a number of cases that in this context the question of relevance is to be determined by reference to the pleadings and affidavits, [4] they cannot always define the ambit of legitimate forensic purpose, since pleadings are confined to material facts, while evidence may go beyond the material facts - not only as to credit but also (as in this case) motive.
In my view, having regard to the evidence given in the related proceedings, it is "on the cards" that the documents called for by these subpoenas will assist in the resolution of the issues in these proceedings. I must say it would have been much more helpful had the plaintiffs bothered to articulate the basis they now advance for the subpoenas in question in response to the letter from the defendants' solicitors which complained that there was no apparent legitimate forensic purpose for their issue. Nonetheless, I think the plaintiffs have shown sufficient to avoid having these subpoenas set aside, in circumstances where they are relatively limited in scope as to financial statements, bank accounts, business activity statements and the like, for a period of only about two years.
Accordingly, I will dismiss the Notice of Motion filed on 28 January 2016 (save in respect of paragraph 8 of the subpoena and notice to produce).
[4]
Orders
In respect of the Notice of Motion filed 9 February 2016, in addition to the orders already made, the Court orders that the plaintiff pay the applicant's costs of the motion on the indemnity basis.
In respect of the Motion filed 28 January 2016, the Court orders that:
1. para 8 of the subpoena to produce filed 13 January 2016, addressed to Topfield Australia, be set aside.
2. pursuant to (NSW) Uniform Civil Procedure Rules 2005, r 34.2, the defendants need not produce the documents referred to in para 8 of the Notice to Produce, dated 19 January 2016, addressed to Toppro Pty Limited.
3. the Notice of Motion be otherwise dismissed.
4. there be no order as to costs of the motion to the intent that each party bear their own costs thereof.
[5]
Endnotes
Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151, [6]-[13].
Toppro Pty Ltd v Kwon (2014/247347), heard by me on 28-31 July and 14-16 September 2015, in which the same counsel appeared. Evidence was given to the effect that the business of Toppro was transferred by Topfield Australia shortly following Ms Joo assuming control.
Brand v Digi-tech [2001] NSWSC 425, [36]; Liristis v Gadelrabb [2009] NSWSC 441; Mackintosh v The Commisioner of Police (NSW) [2010] NSWSC 1064
Hatton v Attorney General of the Commonwealth of Australia (2000) 26 Fam LR 570; ICAP Pty Limited v Moebes & Anor [2009] NSWSC 306
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Decision last updated: 11 March 2016